On the morning of Tuesday, September 4th, the Senate Committee on the Judiciary convened a hearing to discuss President Donald J. Trump’s nomination of Brett Kavanaugh to serve as the latest Justice of the U.S. Supreme Court, replacing Justice Anthony Kennedy who announced his retirement from the United States’ highest court this summer. If confirmed, Kavanaugh will join the Supreme Court after serving for 12 years on the U.S. Court of Appeals for the D.C. Circuit, a position he’s held since 2006 after being nominated by former President George W. Bush.
Because Kavanaugh has served as a federal judge on the D.C. Circuit and not the Court of Appeals for the Federal Circuit, where patent cases are heard on appeal from U.S. district courts, there’s not a great deal of information available pertaining to how he would lean in patent cases if he’s confirmed, or any cases involving intellectual property for that matter. Nevertheless, a summary of D.C. Circuit decisions involving Kavanaugh published by Bloomberg Law does note that Kavanaugh does have a record of deciding cases involving royalties as set by the Copyright Royalty Board.
The lack of real, substantive experience relating to intellectual property law does not, however, mean that the inevitable confirmation of Kavanaugh to serve on the Supreme Court will not have implications for those in the intellectual property community, and perhaps patent owners most directly.
As was the case with Justice Neil Gorsuch, Kavanaugh has a history of being skeptical toward the growth of the Administrative State, which means the growth of agency power is not something he has shown a predisposition to being in favor of in his decisions. Given the outsized importance of the Patent Trial and Appeal Board (PTAB) within the patent industry, and the fact that the Supreme Court has already twice mentioned “shenanigans” in PTAB procedures, another conservative Justice inclined to be skeptical about the growth of administrative power may ultimately set the stage for review of some of the more egregious PTAB violations of the Administrative Procedures Act, such as but not limited to a severe and substantial lack of judicial independence among the Administrative Patent Judges that make up the PTAB (i.e., the Office admittedly engaging in panel stacking to guarantee favored outcomes in inter partes challenges, the fact that dissents are not allowed unless approved by supervisors, and supervisors deliberating with subordinates on cases they were not assigned to handle).
Interestingly, a pair of cases decided by Judge Kavanaugh could inform observers how he might rule as a Supreme Court Justice on certain aspects of U.S. patent law, particularly in light of the questionable process afforded to patent owners by the PTAB.
In 2015’s Settling Devotional Claimants v. Copyright Royalty Board, 797 F.3d 1106 (DC Cir. 2015), Kavanaugh joined a majority opinion which, while it affirmed determinations made by royalty judges at the Copyright Royalty Board, criticized those judges for violations of the Administrative Procedures Act (APA). In that case the Copyright Royalty Board merely split the royalty it awarded, rather than figure out the proper royalty based on the arguments of the parties.
“King Solomon was not subject to the Administrative Procedure Act; the Royalty Judges are,” wrote the Judge Millett. “Congress thus required that the Royalty Judges’ determinations rest on a focused analysis of the record, not an arbitrary splitting of the baby.” If Justice Kavanaugh were to hold those same views as applied to the PTAB, and such a view were to win the day, PTAB procedures would need to instantly change. Even a cursory review of the APA shows the PTAB is not living up to the letter or spirit of the APA.
The Bloomberg piece also notes the D.C. Circuit’s 2009 decision in SoundExchange, Inc. v. Librarian of Congress, 571 F.3d 1220 (DC Cir. 2009), in which Kavanaugh penned a concurring opinion. In concurrence Kavanaugh explained that he believed the Copyright Royalty Board judges should be confirmed by the U.S. Senate because they’re principal officers of the government. Kavanaugh wrote:
As this case demonstrates, billions of dollars and the fates of entire industries can ride on the Copyright Royalty Board’s decisions. The Board thus exercises expansive executive authority analogous to that of, for example, FERC, the FCC, the NLRB, and the SEC. But unlike the members of those similarly powerful agencies, since 2004 Copyright Royalty Board members have not been nominated by the President and confirmed by the Senate…
The new statutory structure raises a serious constitutional issue. Under the Appointments Clause, principal officers of the United States must be nominated by the President and confirmed by the Senate. U.S. CONST. art. II, § 2, cl. 2. Copyright Royalty Board members plainly are officers of the United States. And they appear to be principal officers — not inferior officers — because they are not removable at will and their decisions regarding royalty rates apparently are not reversible by the Librarian of Congress or any other Executive Branch official.
While no challenge is ever truly an apples to apples comparison, much of what concerned Judge Kavanagh here would also be true with respect to PTAB judges. Administrative Patent Judges of the PTAB are not nominated by the President, nor are they confirmed by the Senate. When certain patents are invalidated billions of dollars are easily at stake, and so too are the fate of corporations and industries. Moreover, decisions of the PTAB are not reversible by any Executive Branch official. Thus, it seems that Kavanaugh could be persuaded that the appointment of PTAB judges is unconstitutional because are not nominated by the President and confirmed by the Senate.
There are other indications besides these that Kavanaugh could make an impact on the PTAB and the U.S. Patent and Trademark Office as a Supreme Court Justice in response to overreaching powers at that agency. Like Justice Neil Gorsuch, Kavanaugh is a critic of Chevron deference, a legal principle in which federal courts typically defer to a federal agency’s own construction of their operating statute. A recent Harvard Law Review article reviewed by Kavanaugh is even more pointed, stating that Chevron deference “has no basis in the [APA].” Kavanaugh’s leeriness of Chevron and the growth of the administrative state has found its way into opinions such as his dissent in 2012’s Grocery Manufacturers Association v. Environmental Protection Agency, 693 F.3d 169 (DC Cir. 2012), where he said that the EPA attempted to “weave ambiguity out of clarity in the statutory text” in an attempt to “try to get around the text of the statute.”
Kavanaugh’s preference to adhere to Congressional statute could become important as the Supreme Court considers cases such as Helsinn Healthcare v. Teva Pharmaceuticals, a case that will determine whether secret sales of an invention qualifies as prior art to determine patentability of the invention under the America Invents Act (AIA). If the Supreme Court grants writ to take up Advanced Audio Devices v. HTC Corporation, a case which would challenge the constitutionality of the PTAB under the Takings Clause, Kavanaugh’s views on the impropriety of agency overreach would also become very important.